Martin Browne (Tipperary, Sinn Fein)
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Our next business is an engagement with the Financial Services and Pensions Ombudsman, FSPO. Before we start, I wish to explain some limitations to parliamentary privilege and the practice of the Houses regarding references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. However, the witnesses are giving evidence remotely from a place outside of the parliamentary precincts and, as such, may not benefit from the same level of immunity from legal proceedings as a witness who is physically present does. Witnesses may think it appropriate to take legal advice on this matter. The witnesses are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if any of their statements are potentially defamatory with regard to an identifiable person or entity, witnesses will be directed to discontinue their remarks. It is imperative that the witnesses comply with any such direction.

Before we hear from the witnesses, I propose we publish the opening statements on the committee's website. Is that agreed? Agreed. On behalf of the committee, I extend a warm welcome to Ms MaryRose McGovern, the Financial Services and Pensions Ombudsman, and Ms Áine Carroll, director of corporate and communications services. I suggest that the Financial Services and Pensions Ombudsman should make her opening statement for approximately ten minutes. We will then have questions and comments from members. Each member will have approximately ten minutes and members may speak more than once. If we all adhere to the allotted time we can get in a second round of questions. I now invite Ms McGovern to make her opening statement.

Ms MaryRose McGovern:

I am pleased to have the opportunity, together with my colleague, Ms Áine Carroll, director of corporate and communication services, to engage with the committee today in relation to the work of the Office of the Financial Services and Pensions Ombudsman. The office was established on 1 January 2018, by the Financial Services and Pensions Ombudsman Act 2017. It is the FSPO's mission to provide an impartial, accessible and responsive complaint resolution service that delivers fair, transparent and timely outcomes for all our customers and enhances the financial services and pensions environment. When any consumer, whether an individual, a small business or an organisation, is unable to resolve a complaint or dispute with a financial service provider or a pension provider, they can refer their complaint to us. We deal with complaints informally at first, by listening to both parties and engaging with them to facilitate a resolution that is acceptable to both parties. Where these early interventions do not resolve the dispute, we formally investigate the complaint and issue a decision. That decision is legally binding on both parties, subject only to a statutory appeal to the High Court.

The Oireachtas has given the FSPO an important statutory role, namely, to provide consumers, including small businesses, with an avenue of redress. The need for the FSPO's services can arise in challenging and difficult circumstances where consumers' complaints against financial service providers or pension providers remain unresolved. Against this background, the FSPO strives to provide the best possible services to all our customers and to effectively and efficiently manage every complaint we receive. In our first years in operation, since 1 January 2018, the FSPO has received more than 21,000 complaints. There continues to be a strong demand for the services of our office and in 2021, we received more than 4,600 complaints and closed more than 5,000 complaints. During both 2020 and 2021, we have succeeded in closing more complaints than we received. This enables us to continue to reduce the number of complaints on hand, to conclude complaints more quickly and to respond to the changing needs and expectations of all our customers.

As set out in the Financial Services and Pensions Ombudsman Annual Report 2020, this office reported a significant improvement in the number of complaints addressed and the quality of the service we provided in the year. During 2020, we closed the highest number of complaints since the office was established, against the background of the global pandemic and the move to remote working by our staff, in accordance with Government guidelines.

I have provided some statistics from the 2020 annual report that I will be happy to discuss with the committee. In March 2020, we began to receive the first complaints arising from the circumstances surrounding the Covid-19 pandemic and by the end of 2020 we had received 600 complaints where the complainant identified Covid-19 as an element of the complaint. Due to the measures that we put in place to ensure the efficient management of these new complaints and to prioritise the progression of complaints concerning business interruption insurance, by the end of the year, 305 of the 600 complaints received, had been concluded. Our business continuity plan ensured that we exceeded the targets we set for 2020, while ensuring the safety of our staff, customers and suppliers.

Earlier this week, I published the overview of complaints for 2021 in accordance with our governing legislation. This publication details the 4,658 complaints we received in 2021 and the outcomes we delivered that year, including the conclusion of 5,010 complaints. During 2021, the total sum of compensation or settlements that complainants benefitted from, through the various stages of our services in mediation, formal investigation and on-the-record offers made by providers, amounted to more than €7 million. This does not include the very significant but unquantifiable benefits, in terms of redress by rectification, secured by complainants. I have given the committee some statistics from the overview of complaints, which I will be happy to discuss with the committee.

The overview of complaints contains numerous case studies of complaints concluded in 2021 across our service. These case studies highlight a noticeable increase in the number of complaints made to the FSPO in the area of investment fraud and cryptocurrency where the financial and personal impact of these fraud incidents remains very significant. Again, I have given some examples that I would be happy to discuss.

Global advances in technology over the past ten years have left many consumers at a disadvantage when accessing digital financial products with which they may be unfamiliar. The complaints we have received highlight, in stark terms, the need to be mindful of the risks posed by investing in unregulated activities, such as apparent cryptocurrency trading, which very often carries a higher risk and level of volatility, than regulated product offerings. The widespread availability of financial services online creates opportunities for consumers to gain access to a wide variety of financial products. However, this also carries significant risks.

When a consumer purchases an unregulated product, he or she may not have the benefits afforded by the consumer protection framework and may not be able to make a complaint to our office about it.

It is notable that the Central Bank of Ireland issued, earlier this month, a warning on investing in cryptocurrency. It is clear, from the complaints we receive and concerns at a regulatory level, that every opportunity should be taken to highlight the risks for consumers so that they can make informed decisions.

Our Overview of Complaints 2021 provides information on the reasons for complaints brought to our office. Almost a quarter of the complaints made to the office in 2021, or 23%, were about poor customer service from financial service providers. Many customers experience frustration over the level of customer service offered by their provider. It seems a more responsive approach from providers could resolve such complaints more quickly or, indeed, prevent many of these from arising.

In this regard, one of our strategic priorities — sharing and influencing — recognises that the insights and data that the FSPO shares can positively influence how financial service providers interact with their customers, including in dealing with complaints, and can promote the more-adequate resourcing of complaint-handling.

Our current strategic plan, launched by the Minister for Finance, Deputy Donohoe, last year and entitled Connecting and Innovating, includes our strategic priority of evolving and innovating, which entails renewing our commitment to continuing to adapt and evolve our service to both anticipate and respond to the changing needs and expectations of all our customers. In delivering on this priority, we will shortly publish a new customer charter and customer action plan, which have been developed through a consultative process with our internal and external customers.

I recognise that the customer experience of our own service users is a continuation of a consumer’s journey in seeking to resolve his or her financial service or pension complaint and that the provision of good customer service is not something that we can hold financial service providers and pension providers alone accountable for.

This office continues to work to place the consumer at the heart of its processes and to contribute to making his or her complaint journey a fair, efficient and effective one, regardless of the eventual outcome. To this end, our new customer charter and customer action plan will strengthen our existing commitments by going further than ever before to enhance our service quality, accessibility and choice, along with broadening our information-sharing and stakeholder-engagement activities.

The customer charter introduces further commitments in areas such as service evaluation and sustainability, which will increase our transparency, demonstrate our accountability and underpin our commitment as an environmentally conscious public sector body. Most especially, the customer action plan will ardently reflect our commitment, under our strategic plan, to equality and human rights as well as our public sector duty. It will espouse our values of fairness and integrity by positively influencing access to our services for all our customers equally, promoting fairness and welcoming diversity.

The Oireachtas has granted this office the power to publish anonymised legally binding decisions regarding complaints against financial service providers. To date, more than 1,500 such decisions have been published and are available online through our website. In addition, our governing legislation allows for the publication of case studies of pension complaints. I believe the publication of FSPO decisions and case studies greatly helps to broaden the awareness of the role of the office and promotes a greater understanding of how we deal with complaints against financial service providers and pension providers.

To date, we have published seven digests of decisions, which include short summaries or case studies of a selection of legally binding decisions. These digests enable us to highlight particular categories of complaints. Our must recently published one, our digest of travel insurance complaintspublished in February 2022, highlighted important factors for consumers to consider if buying travel insurance and identified examples of where complaints were upheld because of a failure by the insurer.

In 2021, we published a digest of decisions relating to complaints from businesses. Included are summaries of 12 decisions relating to declined business-interruption insurance claims arising from the Covid-19 pandemic. In 2021, we continued to receive complaints where the complainant introduced Covid-19 as an element of their complaint. In addition to 600 complaints received in 2020, a further 275 new complaints of this nature were received in 2021, and we continued to prioritise complaints concerning business-interruption insurance in recognition of the importance to policyholders of achieving a swift understanding as to whether they were entitled to policy benefit payments.

In addition to publicly sharing our decisions, case studies and publications, the Act facilitates the sharing of information by the FSPO with the regulatory authorities — the Central Bank of Ireland, the Competition and Consumer Protection Commission, and the Pensions Authority — in a way that contributes to promoting the best interests of consumers and actual or potential beneficiaries of financial or pension services and to the efficient and effective handling of complaints.

Sharing information is a crucial part of ensuring the effective operation of the consumer protection framework, alerting regulatory authorities to potentially systemic issues that may warrant further consideration by those authorities. Our relationships with the regulatory authorities are marked by close co-operation and positive interaction, recognising our individual roles in the consumer protection framework.

In 2021, in addition to the two legally binding decisions we referred to the Pensions Authority and the 13 legally binding decisions referred by our office to the Central Bank of Ireland, we shared a copy of every legally binding decision issued concerning a complaint about a tracker mortgage interest rate with the Central Bank of Ireland. The same approach was adopted for legally binding decisions issued in complaints concerning declined insurance claims for business interruption losses.

In addition to sharing our data and insights with the regulatory authorities, providers and their representative bodies, the FSPO recognises the value of its information to consumers. Our strategic plan establishes connecting and engaging as a strategic priority for us in the coming period.

Since 2021, we have worked to enhance our website, focusing on providing information on our services in an accessible way. This has included the creation and promotion of a series of online animated videos designed to communicate with our customers and prospective customers on how our processes work. These videos use clear language and subtitles to ensure accessibility for all our customers.

In delivering against this strategic priority, the FSPO has begun to utilise social media as a communications tool in addition to more traditional communications channels. We are growing our audience online so that those who may have less familiarity with our services can find us when they need us and learn more about our role.

Interestingly, 74% of complaints to the FSPO in 2021 were received online, by comparison with 50% in 2019. There is no doubt that the pandemic has further accelerated the transition to digital engagement for many. However, we are very conscious of the risk of digital exclusion. In that regard, we are developing our communications strategy, which will include actions to engage across the country, including with groups of consumers who may have lower levels of awareness of our services, and working with stakeholders to do so.

I thank the committee for the opportunity to engage with it today. Our office plays a key role in Ireland’s consumer protection framework. We perform our statutory role guided by our values of fairness, integrity, independence, accessibility and effectiveness. We are committed to delivering for our customers and continuing to improve the quality of our service. For the FSPO, as for all organisations, the impact of Covid-19 has continued to feature over the past two years. I pay tribute to our staff, whose dedication to our work and customers continues in spite of the personal challenges posed over that period. We will be very happy to answer any questions members may have.

Martin Browne (Tipperary, Sinn Fein)
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I thank Ms McGovern. I would imagine that there will be many questions. I want to ask one or two myself, and Senators Higgins and Buttimer will follow me.

Are many of the disputes resolved informally, or are the complaints recorded?

Ms MaryRose McGovern:

We are happy to say the vast majority of complaints are resolved without it being necessary to proceed to a legally binding decision. We are constantly examining our processes to determine how we can move our complaint files through the office as quickly as possible, and we try to identify issues as soon as they arise so we can resolve them. In both 2020 and 2021, the vast majority of complaints that we closed were closed informally. We have a very high percentage of closures using our dispute-resolution service, whereby the parties themselves, through the assistance of the FSPO mediator made available to them, get the opportunity to design their own solutions. They can then choose the terms on which they can resolve their complaints. It is very much within their own control. It is our default process. It is our absolute preference that the parties themselves be able to resolve their complaints. However, if that does not prove possible, we move on to the formal investigation process. That takes a good bit longer. It is a very detailed process involving the gathering of evidence and information from both parties and ensuring both have a comprehensive opportunity to make their submissions about the issue that gives rise to the complaint, because ultimately the outcome of that process is a legally binding decision.

For that reason, we want to make sure those parties are thoroughly heard.

Martin Browne (Tipperary, Sinn Fein)
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In regard to business interruption insurance, what seems to be the issue? Is there any one issue or are a couple of issues involved? There are 295 resolved complaints. Is there a common thread between them?

Ms MaryRose McGovern:

When publishing our digest of decisions relating to complaints received from businesses last year, we took the opportunity to identify 12 different legally binding decisions that had been issued arising from complaints made because of declined business interruption insurance claims. Insofar as the legally binding decisions are concerned, the outcomes of those complaints very much depend on the wording of the policy provisions. The Chairman may have seen today that another High Court decision has been delivered by Mr. Justice McDonald in a similar situation. Again, the very specific wording of the policy was at the heart of the comments made by the judge. The wording of the particular policy is very important. As with any other policy, whether for travel insurance or household insurance, it is useful for consumers purchasing a policy to take a little bit of time to get familiar with the policy wording and to try to develop an understanding of precisely what cover they are purchasing and will be paying for. To come back to the Chair's original question, the outcome of those complaints very much depends on the wording of the policy itself. That is why we chose to include 12 decisions in that digest to enable people to compare those outcomes, which were based on the policy wording at play in each case.

Martin Browne (Tipperary, Sinn Fein)
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In this day and age, why is it that banks do not allow people to use their bank cards to purchase cryptocurrency but those same banks will give people a loan to buy it? Is that not contradictory?

Ms MaryRose McGovern:

I believe the Chair is referring to one of our case studies.

Martin Browne (Tipperary, Sinn Fein)
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Yes. I just did not want to name anybody.

Ms MaryRose McGovern:

That is okay because the real name was not used in the study. Anything we publish is anonymised. Cryptocurrency is a highly risky and volatile investment product. In saying that, I am very conscious that people who believe they are investing in cryptocurrency are probably not doing that but are rather investing in something that is in some way linked to the price of cryptocurrency. However, unless you have the key to Bitcoin or Ethereum, you do not really own cryptocurrency. When you are lured onto one of these sites and encouraged to invest in these online platforms, you may be given the option to invest in what are really contracts for difference or it may turn out that the platform is fraudulent and induces you to start trading with, perhaps, $200 or €250. You can then feel quite empowered by the results the fraudulent website leads to you to believe you are achieving.

Philippa, the subject of one of the other case studies we included in our recent publication, actually received money into her account on foot of trades she believed she was entering into. It was on the strength of this that she began to have faith in the process and ultimately borrowed quite a large amount of money, which was not as much as the investment manager had been encouraging her to borrow but was still €20,000, and placed it in what she believed to be a cryptocurrency investment. When the whole thing crumbled away, there was nothing there and the money was gone. There was nothing behind all of the lovely visuals she was seeing on her screen. There was no substance. It is probably a good thing that a bank does not permit the purchase of cryptocurrency with a credit card because it is a high-risk purchase and declining a transaction of that nature and asking people whether they are sure they want to do that is probably a good thing for a bank to do.

With regard to the particular case study the Chairman has talked about, the parties themselves agreed to a resolution within the mediation space. The details of that are confidential but I suspect the reason a settlement was achievable was that the bank in some way recognised the loan should not have been made available.

Emer Higgins (Dublin Mid West, Fine Gael)
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I thank the ombudswoman for her statement. I hope that is the correct term.

Ms MaryRose McGovern:

I am perfectly happy with ombudsman. I consider it a very gender-neutral term. However, if the Deputy wants to go with ombudswoman, that is equally fine.

Emer Higgins (Dublin Mid West, Fine Gael)
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No, that is absolutely fine. I thank the ombudsman for her statement and for sharing her insights with us. One of my roles within Fine Gael is that I am the spokesperson on finance technology. That is because I worked in the area before I became a Deputy. I will focus my contribution and questions on cryptocurrencies. We all know about the prevalence of phishing scams, fraudulent phone calls and malicious text messages. They are discussed widely in the communities we represent. Innovations like online trading and cryptocurrency sales are not immune from fraud either. Trading in cryptocurrencies is quite a high-risk activity, which is why I believe that, at the very least, we need to have warnings on cryptocurrencies. Government absolutely supports the development of new financial technologies, as we should because that spurs innovation and digitalisation, but the warnings from the Central Bank, which the ombudsman has spoken about here, are clear. The Central Bank has highlighted the risks involved in buying or investing in virtual currencies. Cryptocurrencies are not guaranteed by the Central Bank. There are no guarantees and no safeguards such as those in respect of regulated financial services. As the ombudsman's case studies have shown, there is a chance of losing one's investment. As I have said, it is a high-risk activity and people need to know that before they consider investing. I was quite struck by what the ombudsman said with regard to it not being possible to use credit cards for that purpose. That is something I was not aware of but I was very pleased to hear it.

Anecdotally, I see a rise in interest among young people, particularly young men, in buying and investing in virtual currencies. While I would not like to quell anyone's interest in investing or financial pursuits in any way, it is very important that all investors fully understand the risks involved. Virtual currencies have no status as legal tender for payments in Ireland. They are not guaranteed or regulated by the Central Bank of Ireland. Unfortunately, as many of the people who have come to the ombudsman have found, this can lead to losing one's investment or being the victim of fraud. The ombudsman's case studies are really important in showcasing this issue. Tom lost €60,000, Paul and Philippa lost €20,000 each and Noah lost almost €30,000. These are big-figure sums and we do not know the personal circumstances of these people who lost all this money. We do not know the impact that loss had on their household budgets or on their mental health.

Since 23 April last year, providers of certain services relating to virtual assets have had to meet anti-money laundering obligations and obligations in respect of countering financial terrorism. Virtual currency providers established here in Ireland are required to register with the Central Bank. It is important to say we should not lose sight of the fact that sanctions against Russia are changing this landscape even further day by day. The Competition and Consumer Protection Commission updated its advice on purchasing and investing in digital currencies and cryptocurrencies last year. While steps are being taken to make people aware of the risks associated with cryptocurrencies, I am honestly not sure they are enough. We need a sustained information campaign and visible warnings on all advertisements for virtual currencies. That includes online advertisements on social media. Does the ombudsman think that would be helpful? Would it be practical and enforceable? Does she have any other advice as to what the Government or the Central Bank should be doing to tackle this?

Before I give her the opportunity to respond, I will commend the ombudsman and her team on all they are doing to connect and engage online. All of the investment in videos, the online complaints mechanism, the online presence and social media is positive and progressive. The fact that three out of every four complaints are now being made online shows her strategy is working, especially when combined with the continuing outreach and communication with people who are not IT literate, about whom the ombudsman has spoken. That is a very comprehensive and holistic campaign and strategy for engaging with people. Well done on that.

Ms MaryRose McGovern:

I thank the Deputy. Coming back to crypto-assets, the first point I would like to highlight is that they are not a regulated product. Any issue arising out of cryptocurrency, therefore, is not necessarily a complaint that can be made to our office. One can see from the case studies that we have published in the overview that, in most instances, the reason a complaint came to the office was because, after money had been transferred, the nature of the complaint was one against that person's bank for having transferred the money, or for failing to successfully charge back or pullback the money after a single euro payments area, SEPA, or Society for Worldwide Interbank Financial Telecommunication, SWIFT, transfer. Insofar as the providers of cryptocurrency are concerned, however, this office has no jurisdiction because they are not regulated financial service providers.

Having said that, the market in crypto-assets, MiCA, regulation is making its way through Europe at the moment. However, I do not expect it to become effective until 2023-2024. Even at that stage, there will be a transitional period of, I believe, 18 months. This is not something that will happen overnight. The approach to be adopted with the MiCA regulation is a little bit like the markets in financial instruments directive, MiFID, with a cooling off period and an actin-in-the-best-interests-of-the-customer approach, but we are a long way from that. One of the issues with investing is that consumers who are going online will not find themselves necessarily investing with providers that will be covered under MiCA or regulated by any particular competent authority.

This is probably a good opportunity to say that the office expects regulated financial service providers to take the steps to establish suitability with their customers as to whether a product is regulated. I say that because although the office does not have jurisdiction over unregulated financial service providers, there are some regulated financial service providers that also make unregulated product offerings. In that context, before introducing an unregulated product, we would expect the regulated providers to ensure that they have established suitability. From a consumer point of view, it is very important to take the time to try to develop an understanding as to who one is engaging with, are they regulated or unregulated, will one have the benefit of the consumer protection framework if something goes wrong, and will one be able to make a complaint to the Financial Services and Pensions Ombudsman?

The Deputy mentioned young men, and why this is happening. It certainly appears that the ability to use one’s mobile phone makes this a very friendly, easy and comfortable interaction. We carry our mobile phones around in our pockets. They do not threaten us and seem like perfectly trustworthy devices. Being able to engage online in what appears to a person to be an investment platform with a view to earning money or finding some way to yield some profit creates, perhaps, a comfortable space, whereas one might otherwise perhaps think twice about taking some of those steps to transfer money.

One of the things mentioned by the Deputy is the personal impact on people, which is not just financial, there is also a mental impact. She mentioned that we do not know what their personal circumstances are. One of the other case studies in the overview that was published this week was the case of Cathal, who sent money to England for the purposes of buying a tractor. Things did not go right and neither the tractor nor the money were recoverable by Cathal. It was on foot of that loss that he then engaged in online trading with a view to recovering his losses. There is an element of people perhaps not making the wisest decisions when they are under pressure financially from other sources.

There is also the case of Pavel, who was feeling a little bit alienated from his children who were living in a different country and were reaching life stages where he wanted to give them some money. He felt a little bit under pressure and wanted to earn some money fast and, unfortunately, things did not go right for him either.

The Deputy mentioned Noah. I will also mention him because this was not a crypto-investment but was a loss of €29,000 because Noah transferred funds using an international bank account number, IBAN, which he believed to be the correct one but which, it transpired, was incorrect. Noah’s bank moved very quickly to try to recall that money and managed to get €9,000 back, but the complaint was made to our office against the bank for having failed to recover all of the moneys. I would like to highlight that case study if I could for the Deputy because it is important for consumers to understand that an IBAN is a unique identifier in accordance with the payment services regulations. There is no cross-matching process and the bank is obliged to carry out the instructions that it is given by way of the identification of that IBAN. The bank had no way of knowing that it was a fraudulent IBAN. It is very important to double-check the IBAN details because that combination of letters and digits is very critical to ensuring that the money will end up where one wants it to go. There are practices I see taking place where an IBAN is received in writing, and then there is a phone call to validate that verbally as well as in writing. That is probably a good thing, particularly if one is transferring a large amount of money.

Emer Higgins (Dublin Mid West, Fine Gael)
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I do not know if the Ombudsman can get into this level of detail, but did somebody intercept their communication and put it into-----

Ms MaryRose McGovern:

Yes, his email account had been hacked.

Emer Higgins (Dublin Mid West, Fine Gael)
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Wow.

Ms MaryRose McGovern:

I do not think that is an isolated incident; it tends to happen a great deal. Receiving IBAN details by way of email carries a significant level of risk.

Emer Higgins (Dublin Mid West, Fine Gael)
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I thank Ms McGovern for those remarks which are greatly appreciated.

Martin Browne (Tipperary, Sinn Fein)
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I thank Deputy Higgins and call Senator Buttimer now, please.

Jerry Buttimer (Fine Gael)
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Gabhaim buíochas leis an gCathaoirleach. I welcome Ms McGovern. I congratulate her on her presentation and on her work. On a purely functional level question, is she still operating in an acting capacity or has she been appointed?

Ms MaryRose McGovern:

No, I am the acting Ombudsman. The Minister for Finance, Deputy Donohoe, has appointed me in an acting capacity for a maximum of 12 months while the recruitment process gets under way.

Jerry Buttimer (Fine Gael)
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I thank Ms McGovern very much and I wish her well in her tenure.

Ms MaryRose McGovern:

I thank the Senator.

Jerry Buttimer (Fine Gael)
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The acting Ombudsman’s report, as Deputy Higgins has said, and the ongoing online engagement has been quite good. The sense of connectivity is one that we should acknowledge. I also wish to pay paid tribute to Ger Deering for his work. He was very accessible to us as members of the committee or as Members of the Oireachtas and I thank him for that.

To begin, I will flag a little private meeting I had yesterday where I spoke offline to the acting Ombudsman and, with the permission of the Chairman, I will raise with the Ombudsman a petition we had before us from a person in Cork, who I will not name today at the meeting. There is an ongoing saga which needs to be addressed in the unfairness to the injured party and in the engagement between banks and the people in question here. I hope that the acting Ombudsman will indulge me in raising that matter with her at a future date, if that is okay.

Ms MaryRose McGovern:

Through the Chair, that will certainly be okay with me. I received correspondence from the committee yesterday. I am unsure if that is the same matter to which the Senator is referring now.

Jerry Buttimer (Fine Gael)
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It is, more or less.

Ms MaryRose McGovern:

We will have a look at that and we will, of course, be replying to it.

Jerry Buttimer (Fine Gael)
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I thank the acting Ombudsman. In the case of this complainant, there is a sincerity and frustration in respect of an anomaly and lacuna upon which we need to have a definitive answer and I will come back to that again on another day.

In the context of the Ombudsman’s report, which is interesting, the number of complaints are down by 20%, at just over 5,000, but the number of successful outcomes is down by 19%. It there any particular reason for that?

Ms MaryRose McGovern:

I was looking back at the numbers for the past number of years and our closure numbers in 2018 and 2019 were approximately 4,500 consistently. There was a build-up within the system after that and, as a result, we were supported by our Financial Services and Pensions Ombudsman’s council in securing an additional budget allocation to bring in further resources to address that build-up before it became a problem.

On foot of that, we were in a position to close a higher number of complaints in 2020 in order to bring the numbers back under control, as it were.

I am very pleased to see that in 2021 we continued to close more complaints than we received. That is a critical indicator for us, because, as long as we continue to close more than we receive, we are able to keep improving on the service we deliver to all of our customers. It also helps our own staff because they want to make the service available in the speediest way possible to our customers.

Jerry Buttimer (Fine Gael)
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In terms of the Bank of Ireland, 16 cases were upheld around a combination of reasons such as tracker mortgages. How would Ms McGovern describe her engagement with the banks and their engagement with her? The core of what I am coming to, which I raised in the Seanad a number of weeks ago, is the issue of customer service and care in this country. It has deteriorated rapidly. One could spend two hours on hold to even get hold of someone to get an answer, between GDPR and trying to get the right answer or person. Some people have not got the capacity or the patience to keep pushing the button to get the answer. How does Ms McGovern find her engagement with the Bank of Ireland and the Central Bank in terms of being able to be the voice of the customer?

Ms MaryRose McGovern:

Everybody is agreed that holding for minutes on end is very frustrating for customers. The Senator will, no doubt, have seen recently published Central Bank of Ireland research where the abandonment rate on some lines was greater than 50%. One can well understand the frustration of a person. No matter how patient one is, to have to hold on for more than ten minutes is frustrating, let alone when it goes over half an hour.

I was conscious of that research when I was looking at the statistics in terms of complaints to this office. Customer service was identified as an issue in 23% of complaints. That seems to bear out that research. I was pleased to see the Central Bank has indicated it would have certain expectations from financial service providers in terms of customer support access.

Having said that, many customers are quite happy to engage online, whether it is through a chat forum or by way of email. However, the demographic that wants to pick up the phone and talk to a human being should be able to receive a service within a reasonable period of time. I am not in disagreement with the Senator.

In terms of our own engagement with the Central Bank of Ireland, we have a very good working relationship. I was conscious that the Governor, Mr. Makhlouf, was speaking yesterday at the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach. He indicated that one of the Central Bank's priorities for its work plan this year was the review of the consumer protection code. It is reaching a stage where it will go out for further comments and consultation from stakeholders.

Happily, we have been on notice of the work being undertaken for quite a period. I wrote to the Cental Bank in 2020 and again in 2021 to identify some issues of which we took the view that it would be useful to take account in the work being undertaken on the review of the consumer protection code. I can speak a little bit about those if the Senator would like me to.

Jerry Buttimer (Fine Gael)
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I would.

Ms MaryRose McGovern:

We think our insights about what gives rise to complaints to this office will help the Central Bank to understand where improvements to the consumer protection code would be useful. The submissions made to the Central Bank are available on our website if anyone would like to have a look at them.

One of the issues we identified was the online purchase of insurance policies and we took the view that the duty of disclosure is a two-way street. It works both ways. The concept of filling in an application form and providing certain information and then being asked to accept assumptions which form the basis of the contract, without being required to acknowledge each of them individually, was likely to give rise to complaints. We did not take the view that the consumer would necessarily understand what assumptions they were agreeing to.

We took the view that there was an emerging difficulty arising out of auto-renewal of motor insurance policies; namely, the lack of clarity around whether auto-renewal would involve the same contract, the same premium or the same terms, and the question of whether one could withdraw from it. We thought it would be useful to look at those sorts of questions.

One of the significant issues for this office is the use of branding. It is increasingly difficult for consumers to understand with whom they are in a contractual relationship. If you went off today and spoke to your broker about incepting a household insurance policy, you might make a claim in a few months' time only to get correspondence from somebody to say the claim had been looked at and declined. If you wanted to make a complaint, you might get a letter, and then you might come to the Financial Services and Pensions Ombudsman. Typically, consumers in those circumstances are completely confused as to who they should make a complaint about. Some will believe they should make a complaint against the broker that sold the policy. Others will believe the complaint should be made against the entity that wrote to decline the claim. In a large number of cases, it transpires that the complaint should be made about be a third party, the insurer, which has outsourced its claims handling or management to a claims-handling company. It is very difficult for consumers to understand who they should complain about.

It should not be a struggle for consumers to understand with whom they are in a contractual relationship. In the context of that branding piece, in our submission of April 2021 we asked the Central Bank, in its work on the consumer protection code, to have a look at the regulatory obligation when issuing final response letters to give better information to consumers in order that they might understand who is responsible for the conduct about which they are complaining, and whether that relationship is complicated by an outsourcing, an intermediary or whatever it might be.

I know the Central Bank has questions in its own mind about information overload. However, one of the issues we raised with it was the issue of communications. People can become quite upset when they receive periodic notifications and they do not necessarily understand that they are mandatory and that the bank really has no option but to send them out. Perhaps the solution is to say that they are mandatory and that might help people to understand, but we think there are lots-----

Jerry Buttimer (Fine Gael)
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My apologies. Is it within the remit of the Financial Services and Pensions Ombudsman to stipulate that, as part of that mandatory obligation, the letter and content should be very clear that it is a mandatory requirement and that the consumer has nothing to fear or worry about? In older people, in particular, it creates a sense of fear.

Ms MaryRose McGovern:

I agree with the Senator that it causes concern. However, this office does not have that regulatory mandate. That would be a matter for the Central Bank. However, we have shared those views with the Central Bank with a view to having it think about how that sort of issue could be addressed. I agree with the Senator that if these communications arrive in, once per month or whenever it is, it would certainly help the recipient of those communications if he or she were to understand that it was a mandatory requirement. It is automated. Nobody has necessarily sat down to write that letter to the person. It is coming because it is a regulatory requirement.

Jerry Buttimer (Fine Gael)
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It is a bit like the person whose spouse has died getting that automated letter. It causes upset and hurt. I ask the Chairman that we, as a committee, based upon the ombudsman's comments, reflect upon how we can engage with the Central Bank as part of our outcome from today's meeting, if that is appropriate.

Martin Browne (Tipperary, Sinn Fein)
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I cannot see a problem with that. I would not say that any of our members would see a problem with it, either.

Jerry Buttimer (Fine Gael)
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I thank the Chairman.

Jerry Buttimer (Fine Gael)
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I will make one final comment. I am conscious of time and I do not want to hold up the meeting. I thank the witnesses for their engagement, which has been very positive. In her presentation to us today, Ms McGovern spoke about how almost one quarter, that is, 22%, of the complaints made to her office were about poor customer service. I say to the ombudsman, Chairman and members that this is something on which I am actually very strong. Does the ombudsman have any role, and again, this is a bit like the last question I asked, in terms of making a requirement on the banks? Is it a Central Bank of Ireland requirement to engage with and be conscious of the needs of customers in the case of service but also in the mundane nature of simple information?

I will finish on this. The whole context of travel insurance is fraught with hardship for people. Ms McGovern made a comment that in the context of travel insurance, ensuring the appropriate cover should be straightforward and do what it says in the print, and that we should not have to go through the small print where people can, if you like, be tripped up. As Ms McGovern will know, many people come to us and to the ombudsman about insurance policies when they do not have the cover they think they have. Has she any advice on what the ombudsman can do in terms of working with providers of travel insurance, but also with the banks, in terms of customer service? I will conclude on that point. Again, I thank the witnesses for their courtesy and their presentation today.

Ms MaryRose McGovern:

I thank the Senator. Starting with the customer service piece, the role of this office is to investigate individual complaints. Where any complaint is received that has a customer service element, we will investigate that and if we find that the complaint should be upheld, we will direct compensation as appropriate. We share our insights and outcomes around that piece to do with customer service complaints and those 1,500 decisions are available in our database of decisions. We want all providers, consumers and consumer bodies to be familiar with those decisions in order that there can be an understanding as to how we approach the sorts of issues that arise when customer service is delivered in a way that is poor.

Coming back to travel insurance, whatever the size of the print, our expectation is that the wording should be clear. It should not be a struggle for the policyholder to read the provisions and understand whether they are covered. One of the case studies in our travel insurance digest concerned Mark and Sandra, who were abroad and headed off on a three-hour hike. When they came back, their rental car had been broken into and their valuables were gone. One policy provision said in that instance that valuables that were left in a locked car would not be covered. Not too far away, however, was another policy provision that indicated that valuables left in a locked vehicle would only be covered if it was between daylight hours of 9 a.m. and 9 p.m. Those were completely and utterly in conflict. That is simply not acceptable. A person should be able to pick up his or her policy and be able to see the headings and negotiate it. I would urge and encourage consumers, and I am conscious it is that time of year, which is why we published the travel digest at that time, who are looking at accepting travel insurance policies to have a look at the digest and some of those other case studies.

Sometimes, there is not an understanding as to the cover one is putting in place and particularly around the issue of pre-existing medical conditions. We can be very optimistic about our own health. We might think we are absolutely fine but if a person had blood tests last month or X-rays or whatever it might be, even if his or her condition does not have a name, it may be a pre-existing condition because there is something at play that is under investigation at the moment. Before I finish up with the Senator, I might ask my colleague, Dr. Carroll, to come in on issues arising out of some of those questions.

Dr. Áine Carroll:

With regard to the queries Senator Buttimer raised around the sharing of information with the regulatory system, as the ombudsman outlined, that is a key focus for us in the FSPO. One of our strategic pillars in terms of our current strategic plan is sharing and influencing. We are very conscious of the value of the information that we have within the FSPO in terms of particular complaints and issues that have arisen. That will be a foundation stone in terms of our overall communication strategy that we are currently finalising. A broad range of stakeholders are involved in financial services in Ireland, not just in the regulatory system but also in terms of financial education.

Touching on some of the comments made earlier with regard to cryptocurrency, there is obviously a strong need for further consumer information in this area. Indeed, there are some actions set out in the Ireland for Finance action plan as well. We believe the publication of the 1,500 decisions to which the ombudsman referred, as well as the digest, really makes that information visible. That will be of huge use to other parties as they go forward in considering an appropriate response to these issues.

Jerry Buttimer (Fine Gael)
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I thank the witnesses very much.

Martin Browne (Tipperary, Sinn Fein)
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Is the Senator happy to bring up the case he raised yesterday directly with the ombudsman through email?

Jerry Buttimer (Fine Gael)
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I will not do it publicly today but I will talk to the ombudsman again. I would hope that maybe we could revisit that case. I will talk to the ombudsman's office. I thank her for that offer. I will do so rather than doing it publicly here today.

Pat Buckley (Cork East, Sinn Fein)
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I wish the ladies a good afternoon and thank them very much. They will notice we always keep the best for last. I will be as brief as I can. I will touch on cryptocurrencies and the risk factors and reasons people take the gamble on it for a quick fix. In Ms McGovern's opinion, should there be a national warning campaign on the dos and don'ts of this but to have it, as we say in the House, in plain English with the risk factors laid out? I am well aware of many young people and the current situation with Covid-19 and so forth. Jobs and money were not there and bills were building up. People took a gamble on it and thought it was a fine fix. That is the first issue.

One thing in which I was very interested during Covid-19 was business interruption insurance. One part in the ombudsman's report said that almost 300 were unresolved complaints. Could Ms McGovern even explain how technical that is? What is holding those cases up? We are so diverse at the moment as a society. This is about accessing the ombudsman's service. We spoke about accessing businesses and complaint systems and so forth. Does the ombudsman have a disability liaison officer within her office for people who are not well-versed in technology or whatever else?

I am very interested in the cases because again, we have our own examples. One such case involves a battle with a bank with which a person had an insurance policy the bank claimed was not there. Unfortunately, the business closed. The person who was running that business was not aware of her policy until later but the bank is now refusing to pay out on that policy. Does the ombudsman have the power to go in and investigate if that person approaches the office with all that information? I know there is a lot there but as I said, that is as far as I will go.

Ms MaryRose McGovern:

I might start with the last question. If there is a complaint about a failure to recognise or pay out on an insurance policy, that is a sort of complaint we can have a look at to see if it is coming. There may be an issue around time limits. I do not know how long ago it is but we would certainly be able to look at that and assess it, and, if it comes within the jurisdiction and time limits of the office then certainly, we would be able to investigate it then. The starting position would need to be to follow the usual process to make the complaint to the bank in question and get the final response letter. If the person is still not satisfied then, she can fill in the complaint form and we will pick it up from there. We would be happy to do that.

I will ask my colleague to talk to the Deputy a little bit about the disability liaison officer question but I might just come back to the Covid complaints. There are 600 complaints that are referred to in the overview of complaints. Those are complaints where the complainants themselves identified Covid-19 as an element. They are not necessarily business interruption complaints. Of the 600 complaints we received in 2020, we saw those thankfully peter off a little bit. Then, we received 275 Covid complaints in their entirety in 2021, of which 75 were business interruption complaints.

I do not know if that answers the questions. We have tagged them. We tried to make sure we kept an eye on these as soon as they started coming in. We tagged them once the complainant indicated there was a Covid-19 element so we could keep an eye on whether there were business interruptions or payment break issues arising. If somebody was looking for a payment break against a background of Covid-19, we could keep an eye on those and prioritise as appropriate, depending on what was going on with those complaints. I will ask Ms Carroll to talk a little about the disability question.

Ms Áine Carroll:

I thank Deputy Buckley for the question. We have an appointed access officer for our service. We are very conscious, as Ms McGovern said in her opening statement, that a lot of interaction with our customers is now online. However, many customers cannot, or choose not to, interact online and we are very conscious of the need to ensure we deliver the services in whatever way our customers need them. For that reason, equality, diversity and inclusion are key cornerstones of our customer action plan, which will be published very shortly. Our HR strategy and our people strategy are very much focused on these areas as well. Right now, we have a public office that our customers can visit. We have private meeting rooms if they want to come in and talk to us about their complaint. Our building is accessible by lift and stairs. We are wheelchair-accessible so we currently have the requirements in place for anybody who wishes to visit our office but we are also looking at things like geographical accessibility, whether the need to visit our office in Dublin may act as a barrier and whether we can use technology or other means to provide access to our services for those who may not be able to visit us. It is something we have been very conscious of since the office was established and we continue to consider it in all our work going forward.

Pat Buckley (Cork East, Sinn Fein)
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I will be very brief. I appreciate how easy it has been to engage with the witnesses. I have taken so much out of today's meeting. I commend the witnesses on their report. All ombudsmen's offices should be easily accessible, no matter where they are based. I have learned so much from engaging in this meeting today and the public who are watching should be able to recognise what the ombudsman can do in each section of society. I will follow up on that individual case with the ombudsman. I thank the witnesses for coming in today.

Ms MaryRose McGovern:

Ar ábhar na rochtana, ba mhaith liom cúpla focal a rá ó thaobh Acht na dTeangacha Oifigiúla (Leasú), 2021, a síníodh le déanaí. Beidh sé de dhualgas orainn go léir súil ghéar a choimeád ar na cuspóirí atá leagtha amach ag an Rialtas san Acht sin agus ar an dul chun cinn gur féidir a bhaint amach maidir le hardchaighdeán seirbhíse poiblí a chur ar fáil trí Ghaeilge. Mar is eol don choiste, is teanga oifigiúil Eorpach í an Ghaeilge anois agus ba mhaith liom a dheimhniú anseo, anois láithreach, go gcuirimid fáilte i gcónaí roimh ghearáin trí Ghaeilge. Is an tseirbhís chéanna a chuirimid ar fáil pé teanga atá ag an duine. Tá sí neamhspleách agus neamhchlaon. Idir óg agus aosta, idir Ghaeilge agus Béarla, idir fhir agus mná, neamh-dhénártha nó trasinscneach, is cuma linne. Is an tseirbhís chéanna a chuirimid ar fáil agus beidh fáilte is fichead roimh chách.

Pat Buckley (Cork East, Sinn Fein)
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Ms McGovern covered a lot of things there with regard to being inclusive. I thank her very much.

Ms MaryRose McGovern:

Go raibh míle maith agat.

Martin Browne (Tipperary, Sinn Fein)
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I am glad to see Deputy Buckley is happy. He has lifted all our spirits. I have a few quick questions. During 2020, 6,193 complaints were closed. That was an increase of 95% on the previous year. That is welcome and represents the dedication of the ombudsman's office to resolving issues affecting people. Can Ms McGovern give a brief summary of what was employed to achieve that kind of success rate? Are there any outstanding measures, of which she is aware, that we as a committee might be able to highlight for the ombudsman's office?

Ms MaryRose McGovern:

Our preference is to help the parties to resolve the complaint themselves. As far as we understand, we only ever receive 95% of complaints. Financial service providers and pension providers deal with a lot of them before they get to us. That is what we want to see. If we are doing a very good job and sharing our insights, we should be trying to put ourselves out of business. We should have no complaints. However, complaints will be received and if we can possibly encourage the parties to engage and achieve a settlement through mediation, that preserves the relationship in a better way than if the complaint proceeds to a legally binding outcome. With regard to what we could do differently, we are always looking at our processes to see if there are figures emerging at a certain point in the journey, to see what we can change and to see how we can move things along faster. We are constantly scanning the horizon to see how we can improve our processes and work smarter with a view to moving those things along. As I said at the outset, the faster we can deal with a complaint for our customers, the better for them and for our staff because that is what they want to do.

Martin Browne (Tipperary, Sinn Fein)
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When the ombudsman's office is contacting service providers in the course of its work, are the response times adequate? Does it encounter any issues when looking for information or documents from any of those service providers?

Ms MaryRose McGovern:

In the vast majority of cases, the response times tend to be appropriate. The larger financial service providers have good customer service teams and, as I understand it, they are usually trying to keep an eye on where things are blocked, as it were. There are some instances where we are not happy with the response times and we usually have a discussion and work together to move things along faster. We must bear in mind that this relates to the financial service provider's own customer. This is something the provider should want addressed as quickly as possible. The longer the dispute or complaint goes on, the more unhappy a customer is likely to be, and that is never a good thing.

Martin Browne (Tipperary, Sinn Fein)
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On customer service, in recent years we have seen banks downsizing and closing down. A lot of them have closed down in my own county. People have been left without actual physical banking. It is one of the most disruptive things that can happen in terms of customer service. It is also an issue that is particularly problematic for communities in rural areas. Has the ombudsman received any correspondence regarding the availability of physical branches? Is there provision for some services through the post office network and online?

Ms MaryRose McGovern:

It is important to bear in mind that it is within the commercial discretion of any financial service provider what services to make available to its customers and how to capture that percentage of the market share it is targeting. Sometimes that will include physical branches and sometimes it will not. There are many financial service providers that have no physical branches and are quite popular among the population of Ireland, even though they may be passporting in from a different country. People's needs and requirements may change over time. The Chairman is correct that there are many people living in rural communities who may find it frustrating that they have to travel in order to gain access to a branch. I am very sympathetic to them but this office has no role to play in the nature of the services a financial service provider makes available.

Martin Browne (Tipperary, Sinn Fein)
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I have no more questions.

Jerry Buttimer (Fine Gael)
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I will come in on that point if I may. We have seen in some cases a number of banks becoming cashless. People who walk in cannot take out cash and cannot necessarily meet a cashier or bank teller. I am probably of the old school in that I do not have Revolut and I barely have the mobile app on my phone. It is discommoding to people. It is not just a rural issue. It is an urban issue as well in terms of bank closures. Today I saw that a bank in Cork was selling off three of its properties, and that is their prerogative. I know the ombudsman probably has no role in this, but we need to make a stand in terms of the provision of services for people. It goes back to the whole issue of customer care and customer service. If the dilution of customer care and customer service continues, the ombudsman's office will be inundated and there will be a deluge of complaints. I am genuinely concerned that there is a diminution of service. We are moving to an online platform, which I know will happen eventually in total, but I am concerned about that and I hope the ombudsman's office would promulgate, advise and advocate that we should also have an element of customer care and customer service physically on the ground. The banks cannot just use the words "change" and "Covid" to herald that sort of movement away from the on-street banks to the online platform. I know I am old fashioned and probably in the minority in that regard, but it is something about which I feel strongly.

Ms MaryRose McGovern:

I thank the Senator-----

Martin Browne (Tipperary, Sinn Fein)
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Just before the ombudsman comes in, following on from Senator Buttimer's comments, are there complaints coming in? We do not consider the Senator to be old fashioned, but are complaints coming in across the board from an older generation, concerned that we are becoming a cashless society?

Ms MaryRose McGovern:

I am not aware of any significant trend in complaints of that nature. I understand the point made by Senator Buttimer. In the world of investments, they often talk about the concept of diversification. I was personally very pleased recently when I was in a supermarket and I had diversified to the point where I had some cash in my pocket. It was in the news that there was a difficulty with Opayo. Nobody who was trying to pay by card could purchase products in the supermarket or anywhere across the city that evening. I am all for diversification in having the ability to use cash but there is no doubt but that the speed and ability to transact using cashless methods is desirable to the public and that is where it is driving forward.

Jerry Buttimer (Fine Gael)
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I thank the ombudsman. I appreciate her reply.

Martin Browne (Tipperary, Sinn Fein)
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Do other members wish to ask any further questions? Does the Financial Services and Pensions Ombudsman, Ms McGovern, or any other members wish to make final comments?

Ms MaryRose McGovern:

I want to take the opportunity to thank the Chair for his interest in the work of this organisation. I am conscious that the committee members are always very interested in the work undertaken by our office. Mar fhocal scoir, ba mhaith liom buíochas a ghabháil le baill an choiste go léir as an suim atá acu. Bhí sé de phribhléid againn a bheith anseo agus a gceisteanna a fhreagairt.

Martin Browne (Tipperary, Sinn Fein)
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On behalf of the committee, I thank Ms McGovern and Ms Carroll for appearing before us today. We have met a good few ombudsmen and it has been very informative any time we have met them, to fill us in on what they are doing and the help they provide. I have no doubt that today's discussion has been very beneficial and informative to the committee, and I hope the ombudsman will be able to visit us again in the future and be physically in the chamber with us rather than being virtually present. In the meantime, we wish her all the best for the summer. Stay safe.